Corporate Social Responsibilities in Kuwait
Corporate social responsibilities (CSR) are a form of corporate self regulation inducted into business models. The term Corporate Social Responsibilities was coined in the early 1970s that is after many multinational companies were born. CSR policies of corporate organizations are aimed at providing a positive impact of their actions on customers, employees and shareholders. In other words, its goal is to improve the social environment of communities, it is an organizations means of giving back to the community. This improvement is channeled through nurturing growth and development of communities, including elimination of detrimental practices that affect the public sphere.
When a company is said to take part in corporate social responsibility, it means that they have ethical, social and moral responsibilities towards the community and society in which they are operating. Another important responsibility include in the CSR is the return given to investors and abiding by the national rules in the business dealings and functions.
According to the traditional view of corporate social responsibility, it was related to the key stakeholders of the company only, which are its stockholders or owners. However today the corporate social responsibility of the business is required in every aspect of the business whether they are the suppliers, customers, investors, employees, government, social groups or owners etc (RFB, 2010).
2. Concepts related to Corporate Social Responsibility:
There are several concepts and issues that have emerged today related to the corporate social responsibility. The CSR should now be addressed by the companies in various contexts and some of them are illustrated as follows:
2.1 SOCIAL ISSUES
Due to the operation of the businesses having different internal environment and different cultural values, several social issues can emerge. Some of the social issues that emerge are mainly because of the operations of the business. The social issues would include all type of problems that can arise in a society because of the business. These can be environmental e.g pollution because of business operations, the cultural issues, ethical issues or technological issues etc.
2.2 CSR related to Stakeholders:
Any individuals, organization, societies or elements of the environment that have a stake in the company and is affected by as well as affects the business is known as its stakeholder. Businesses have a number of stakeholders and it must ensure that the rights of all the stakeholders are delivered to them. For example the workforce of the company has some legal rights as well ethically and morally the company should give the workforce some rights related to the operations of the business. For example In a firm, the health and safety of the employee is the legal responsibility as well as the ethical responsibility of the organizations.
The companies have various stakeholders as mentioned before. The stakeholders can be further categorized as the primary stakeholders and the secondary stakeholders. The primary stakeholders of the company are the ones that can impact the organizations business operations. While the secondary stakeholders are the one that can have both direct and indirect impact on the operations of a business. The primary ones are said to have a direct stake and these include the employees, the suppliers, communities, the customers, regulatory bodies, future generations, shareholders, government and business partners etc. even the nature and the environment that a company can have an effect on are a part of its primary stakeholders. The secondary stakeholders even if do not have a direct stake but can be positively or negatively affect by the decisions or operations of the company. These include the interest groups, social groups, political groups etc.
The rights of the primary stakeholders of a company are often protected by the laws because they often have a legal link and have a direct connection with each other. on the other hand, the secondary stakeholders might not have legal rights and privileges but the
Equity holders are the main stakeholders of any concern. Every organization has to fulfill some is a moral and legal duties and rights of their respective owners. Some of these include, seeking to make sure that the prime stakeholders receive an adequate return on what they have invested in the firm. This is not the only right but the basic right. Besides, the owner, employees are also major players in the business, they also have both moral and legal requirements that the firm must meet. The businesses also have a special obligation to its customers in connection with the marketing, advertising, production and quality of products. The products are also expect to offer functionality, safety and value of local communities. All these duties listed for the firm to follow can significantly affect the activities of national organizations and therefore a direct participation in their activities and other enterprises to do business with. Many social commentators also suggest that companies are directly responsible for future generations and wildlife.
2.3 Environmental Issues.
Companies have long been criticized for their negative impact on the natural environment in which they operate. The negative impact of the firm on the environment can be related to terms natural resources and pollution and global warming. In many of the organizations there are no proper systems for waste management. Many firms use fossil fuels that release high quantity of carbon dioxide that is said to be one of the bigger contributors of global warming, and there are social pressure on government and businesses to meet strict standards for environmental and be volunteers in the change process of production which would be less damaging to the environment. Other issues related to the natural environment include acid rain, waste disposal, deforestation, and soil degradation. (Environmental leader, 2010).If an organization does not comply with the standards of environmental responsibility then they not just lose their respect in the eyes of the customers but also face opposition from government, NGOs and various pressure groups.
2.4 Global Issues.
More and more organizations today operate in a global environment. The globalization of trade seems to be an irreversible trend, but there are many opponents to it. Critics point out that globalization leads to exploitation in developing countries and workers, environmental degradation and increasing human rights violations. They also argue that globalization benefits mainly the wealthy, widening the gap between rich and poor. Proponents of globalization argue that open markets lead to an increased standard of living for all, higher wages for workers worldwide, and economic development in poor countries. Many large multinational companies are in scope and will continue to face legal, social and ethical issues posed by the increasing globalization of trade.
2.5 Technology Issues
Another contemporary social problems relating to technology and its impact on society. For example, the Internet has opened up many new opportunities for marketing goods and services, but also opened up new opportunities for abuse of the companies. Issues of privacy and security of confidential information is handled. Biotechnology companies face issues regarding the use of embryonic stem cells, genetic engineering and cloning. All these things are ethical and social implications. As technological capabilities continue to advance, it is likely that the liability of companies in this sector will increase significantly. Research shows that companies are developing a reputation for being socially responsive and ethical enjoy better performance. But the final motivation for companies to engage in corporate social responsibility should not be an economic motive, but the moral and ethical. (RFB, 2010).
3. Corporate Social Responsibility in Kuwait:
CSR is a tool that aids the organization on its mission and serves as dynamic guide as to the organizations principles. There is no formal act of legislation pertaining to CSR; however ISO 26000 is considered as an International Standard for CSR. Public sector organizations adopt the triple bottom line policy; People, Planet, Profit.
Along with the mushrooming of multinational companies the scrutiny of their business activities have also increased. This means that organizations who adopt CSR policies have a greater chance of survival. Adoption of corporate responsibility supports business objectives; it results in increase in compliance, reputation and relationships which in turn increase shareholder value and profitability of the company. The International Business Report (IBR) 2008 states the three major reasons for incorporation of CSR in businesses are; Recruitment/Retention of Staff at 65%, Cost Management at 63% and Public attitudes/building brand at 56%. Other reasons perceived to promote CSR are tax reliefs that are provided by the government and investor relations. Tax reliefs are a tool that governments possess by which it may force a change in the attitudes of companies. This tool can be used to force companies to incorporate a CSR policy in their business models. Investors of the company have an important say within company matters. Multinational companies are on the look for local and foreign investors. This provides Investor an edge to influence companies to adopt CSR plans. The Kuwait CSR conference, which is held annually, promotes incorporation of CSR within businesses and also discusses the performance enhancement that CSR offers. A CSR award ceremony held annually in Kuwait to appreciate the contributions made by organizations to Kuwaiti communities. This awards event honors companies for their achievements on the CSR front. Both the conference and award ceremony encourage organizations to adopt a CSR policy.
A report by International Business Machines (IBM) Institute for Business Value voiced that companies are viewing CSR as a growth opportunity rather than a policy concerning regulatory-compliance or philanthropic issue. The report further states that 68% of the companies that were surveyed had interest in generating revenue through CSR based activities. Customer concern is considered to be the chief driver of CSR actions however 76% of companies state that they don’t completely understand the customers CSR concerns while 16% of organizations claimed that they are able to engage with customers regarding CSR activities.
The three major domains which have received contributions from organizations are health care, education and financing aid and charitable trusts. Within the health care domain, organizations sponsor construction of hospitals, medical centers as well as purchasing of equipment. Corporations also design programs that increase awareness of diseases and disorders among the population. In 1999, a telecommunications company; Zain, sponsored and supervised the construction of Sabah Ear-Nose-Throat Hospital. The Kuwaiti Projects Company (KIPCO) initiated a dyslexia campaign. The goal of the campaign was to increase awareness of dyslexia among students and professional alike. For this deed, KIPCO was honored with CSR award. The Annual report of Kuwait Finance House (KFH) 2007 highlighted that the organization provided KD 1.250 million to Bait Al-Zakat (Kuwait Zakat House), increases the provisions allocated for the construction of 15 ambulance centers on the motorways worth KD 1.450 million.
The second major domain covered by organizations is education. Organizations aim to educate the local communities not only in traditional educational settings but also in educating in awareness of pollution of the environment, development of discipline and personal skills in young individuals, providing training to young professionals through internships. A Kuwait based multinational petrochemical company; EQUATE, sponsors educational programs, research programs and provides scholarships and awards for higher education. The company not only reaches out to students and educational institutes but also believes in knowledge transfer to regional companies. EQUATE also initiated the pollution free Kuwait campaign whose aims were to decrease the level of pollution in Kuwait and to create awareness of the effects of pollution within the masses (KMPG, 2010).
The third area is that of financing relief efforts and charitable trust. Organizations donate allocated funds to trusts from their own accounts. Companies also allot a fixed portion of a sale towards charity. For Example, on the sale of a cell phone a company may forward 5% of its profit to chosen charity .Kuwait airways coupled with Kuwait Red Crescent to provide relief for the less privileged. This association resulted in the launch of a relief project ‘Balsam’, whose goals were to provide remedial measures for the needy. The collection of donations for this project is unique in its manner. Kuwait airways collected foreign currency donations from its passengers. These currencies were then forwarded to Kuwait Red Crescent where they were utilized as needed.
Even though the report published by IBM Institute of for Business Value highlights that CSR is not focusing on compliance but on generation of revenue streams. The incorporation of CSR in local and multinational companies in Kuwait has provided a positive outlook to social activities. This not only has increased faith of the consumers within the companies but also has proven a source of proper ethical behavior for the companies themselves.
4. Example of Corporate social Responsibility in Kuwait:
The Kuwait Oil Company (KOC) long been a leader in addressing environmental sustainability issues. In early 1990, Kuwait in front of the worst environmental disaster in recent history, in the wake of the late Iraqi government on the country. Oil wells and gathering centers were in flames, and the uncontrolled flow of oil was filled with hundreds of huge oil lakes and miles and miles of shoreline contamination. It was imperative that the country's oil infrastructure can be restored and its environment. Today, Kuwait has the world's seventh largest oil exporter and holds approximately 10% of global oil reserves. KOC is the effective management of oil and gas upstream, acting in Kuwait and the storage of crude oil and deliver it to the tank for export. Significantly, KOC has also helped to clean and protect the environment, embracing corporate social responsibility and the launch of a series of bold initiatives on sustainability, using the latest technologies and industry best practices.
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